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Extraordinary reversals follow a marvellous year

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2019 was an extraordinary year for ETFs, with a huge up-swing in their popularity, but no-one predicted the early 2020 down-swing as coronavirus-led panic flooded through the financial markets. The ETF industry globally sailed into 2020, the 30th anniversary of the origin of ETFs globally, the 20th anniversary of European ETFs and the 10th anniversary of the ETF Express Awards, completely unaware of the drama lying ahead.

At the beginning of the year, global ETF assets topped USD6 billion and European assets had beaten USD1 trillion. The last week of February saw huge amounts of volatility globally on the back of the Covid-19 pandemic with the one week to 28 February seeing ETFs experiencing massive trading volumes of USD414 billion, representing close to 43 per cent of all equity trading. Equity ETFs experienced massive outflows as investors looked to exit the markets during the panic and SPY lost over USD10.7 billion for the week.

Further market falls through March have seen our major markets return to levels not seen since the 1987 crash. Each winner interviewed in this report has commented on how the market volatility has affected them and a common view is that the one good thing to come out of the dramas has been the final trouncing of the popular belief that ETFs would not cope in a massive downturn. 

Authorised participants and market makers deserve our praise for managing to keep liquidity flowing in the sector, even when most recently they may have been short-staffed as the Covid-19 pandemic has hit, or social distancing has had its effect. 

This strange year has seen the 10th birthday and first year of not having an ETF Express awards event – a collegiate outing for our industry, first held in our original home on the glorious top floor of Mayfair club, Sketch, with the funky bathrooms, and more recently in our new distinguished home at the Reform Club, with a long walk to the bathrooms.

If this piece were the live speech that I had planned for the 2020 event, I would be looking around the room and recognising a number of faces but it’s taken a pandemic to halt our annual and popular celebration of the European ETF industry. 

My lost live speech would also have been accompanied by a presentation from Lida Eslami, head of business development for ETPs and IOB at London Stock Exchange, which also has its anniversary to celebrate, with 20 years since the first ETF listed on its markets, tracking the FTSE 100 index. London Stock Exchange is winner of our Best European Stock Exchange for Listing ETFs this year.

The mad volatility at the end of February saw London Stock Exchange hit an all-time new record in ETF trading turnover on February 28th, at GBP1.5 billion. Eslami also notes that 2019 saw ETPs account for almost 10 per cent of trading volumes on London Stock Exchange. 

Let me take this chance to congratulate all our winners in this most memorable of years for the ETF Express Awards. These awards are pre-selected by Morningstar and voted on by your peers – you have much to be proud of. 

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